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Steps and Risks Involved in Rightsizing Your Company

Steps and Risks Involved in Rightsizing Your Company

Many people believe that rightsizing a company only involves cutting down on its employees. However, the process of rightsizing is more than that. It involves restructuring a company’s systems to meet its updated business goals and optimize its efficiency and profits. This is the opposite of downsizing, which is done when a company faces financial difficulties and needs to reduce its workforce to avoid having too many resources. Downsizing mainly focuses on cost-cutting, while rightsizing aims to improve the company’s overall quality.

The process of rightsizing in the workforce aims to enhance and restructure the employee framework by appointing skilled professionals to key positions. This enables the company to effectively reach its objectives and expand its target market without compromising the productivity of its workforce. In the process, of course, there are strategies and risks that the company needs to take, which we will discuss in this article.

How Can We Determine If a Company Requires Rightsizing?

You can perform two analyses to determine if your company needs to undergo rightsizing.

  1. One way to determine if your company needs to be rightsized is through activity analysis. To analyze activity, we calculate the amount of time employees spend on their primary tasks and survey how they interpret their work. We then compare these two surveys’ results to identify gaps between their time and duties. If we find that many employees are performing extra tasks, we may need to implement reconstruction.
    • A useful method for evaluating a company’s financial status is through ratio analysis. This involves comparing the company’s current financial statements with its previous records to determine its overall condition. It’s also important to compare these results with those of competing companies to assess future viability and growth potential.

    Steps for Implementing Rightsizing

    1. Examine the requirements of every department.

    To ensure that the company achieves its goals, it is important to observe each department’s performance. Monitoring helps identify any excess resources so companies can decide to restructure their workforce based on the findings.

    2. Gain an understanding of the positions and roles that will contribute to the growth of the company.

    Moving on from the previous stage, it’s important to gain an understanding of all the different roles and positions within your company. This will allow you to identify the areas that contribute the most to the company’s growth and also determine which employees possess the necessary skills to be retained. Additionally, you can assess whether certain employees might benefit from being moved to different departments in order to improve their work performance.

    3. Comprehend the operational requirements. 

    As you progress from the previous stage, it’s essential to comprehend the various roles and positions in your organization. Doing so will enable you to recognize the areas that have the most significant impact on your company’s growth and identify which employees have the required expertise to retain. Moreover, you can evaluate whether certain employees would benefit from transferring to different departments to enhance their work performance.

    4. Achieve rightsizing targets by maximizing adaptability.

    Adaptability is key in facing the challenges of change for all stakeholders in a company, making it easier to keep up with rapid business developments.

    When rightsizing a company, what risks should you consider taking?

    When a company decides to rightsize, it can have various impacts on the organization. One of the effects is the insecurity that employees might feel about their current position. This can lead to losing trust in the company, and they might start looking for other job opportunities. Consequently, the company could lose essential resources and skills. It’s important to note that this loss of trust is inevitable as there’s no guarantee of the position employees will get. Additionally, if the company decides to replace employees, they would have to conduct training and other supporting activities for new employees, which can be both time-consuming and expensive.

    When your company restructures and replaces employees based on their skills, it’s important to have a strategy in place to ensure that you find candidates who are qualified and don’t waste time or money. Using technology as a tool in the hiring process is now commonplace, and Shortlyst offers AI-based hiring technology to help you manage your recruitment process. With Shortlyst, you can easily track candidates at every stage, gain insights into your hiring process, and evaluate your KPIs. With Shortlyst, hiring becomes a breeze!

    Written by

    Shortlyst Team

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